Vail Valley property values take hit from bank sales

NWS real estate KA 2-2-12
Kristin Anderson/kanderson@vaildaily.com
This home has a for sale sign in front of it Thursday in Eagle-Vail. Sales of bank-owned property accounted for more than 21 percent of all Eagle County real estate transactions in 2011. The number of those sales, usually at relatively low prices, has affected other propery values, especially in Eagle and Gypsum.

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EAGLE COUNTY - The real estate market usually favors either buyers or sellers. These days, the pendulum has swung - hard - toward buyers, and sales of bank-owned property is responsible for much of that swing.

Local real estate brokers say the number of sales of bank-owned property - usually acquired by banks in foreclosure procedures - has pushed down the values of other property, particularly in the western part of the valley.

Values are also being affected by the number of short sales in the valley - sales in which the homeowner and lender have negotiated a sale price less than what's owed on a piece of property.

Barbara Hogoboom, an Eagle-based broker with the Team Black Bear division of Keller Williams Realty, said most of the work she's doing these days in Eagle and Gypsum involves either short sales or bank-owned sales. In many cases, it's easier to deal with a bank sale, she said.

Unlike short sales, which can sometimes take three to four months to hash out, bank sales are simple transactions between a buyer and a seller. If there are multiple bids on a home, the bank picks the highest.

And, since lenders want to get those homes off their asset sheets, prices of bank-owned homes are often significantly below market value. That can mean some great values for buyers, depending on where they're shopping.

Corey Lamothe, a broker with Sonnenalp Real Estate, said she recently completed a deal for a three-bedroom home in Eagle-Vail in the low-$200,000 range. And, with interest rates on 30-year fixed mortgages dipping below 4 percent this week, it can be cheaper to own than rent, depending on where a buyer wants to live.

That has many first-time buyers looking for bank sales. And Lamothe said she gets a lot of calls on listings she has.

Laurie Slaughter, a Gypsum-based broker with Prudential Colorado Properties and a longtime area resident, said the combination of prices and availability means she's seeing lots of younger adults who grew up in the valley buying their first homes.

But there are only so many buyers for those units.

According to data from the Economic Council of Eagle County, the county has lost more than 6,000 jobs since 2009. That figure is probably low, since it reflects only jobs that have filed IRS paperwork.

Bill Wilto, a broker with Re/Max Vail Valley said until some of those jobs come back, there won't be buyers for many of the homes on the market.

Between bank sales and fewer buyers, people who aren't in a financial bind who want, or need, to sell are facing tough times.

Wilto said he sometimes advises potential sellers who need to move that they might be better off renting their homes for a while.

But, given the drop in rental rates, people might have a hard time getting in rent what they have to pay to the lender for the mortgage.

That pinch on sellers is creating a lot of frustration, Hogoboom said.

One lady I talked to just broke down," Hogoboom said. "They'd put everything they had into their home and lost it."

While bank sales have had the biggest impact in Eagle and Gypsum, Wilto said the effect on values almost depends on what street a home is on elsewhere.

And none of the brokers interviewed for this story expects the current situation to change any time soon. Wilto said it could be seven years before the Eagle-Gypsum market recovers, and perhaps three for some neighborhoods in Edwards.

Until the market turns, Hogoboom recommended that those who need to sell get all the advice they can. Lamothe said those who have to sell have some options, but every case is different.